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Canada threatens court fight, import tariffs in dispute over U.S. food labelling

OTTAWA - Canada's agriculture minister says he's hoping to avoid an all-out trade war with the United States over food labelling.

But Gerry Ritz warns that, if there is a war, he's prepared to fight it.

Ritz has launched a last-minute appeal to American lawmakers to change U.S. food labelling rules through a 950-page farm bill that could come to a first vote as early as Wednesday.

"I'm hoping that cooler minds will prevail, that the pressure that the American industry is bringing to bear in the next day or two will cause some legislators to step back," said Ritz.

Canada has long complained that the so-called Country Of Origin Labelling provisions adopted by the U.S. government in 2008 hurt meat industries on both sides of the border.

Hopes for a settlement of the dispute were dashed Monday when U.S. lawmakers reached a deal that did not include changes to the labelling requirements.

Failing any last-minute amendments, Ritz says Canada will return the dispute to the World Trade Organization, with arguments in the case expected to begin Feb. 18.

"That's a good thing," said Ritz. "It starts to move it ahead."

If the WTO rules in Canada's favour, tariffs could be imposed by early 2015 on U.S. exports of everything from beef and pork products to grains and fresh fruits.

But that should only be used as a "last resort" measure because tariffs would be costly both to businesses and consumers, warned Lyle Stewart, Saskatchewan's agriculture minister.

"It's not the ideal situation, but it's about the only weapon if everything else fails," Stewart said at the provincial legislature.

However, Stewart said he would support retaliation, if necessary.

"If negotiations fail, if a WTO ruling fails to change the Americans mind on this again, it's about the only tool we have left. And so it will make some products more expensive in Canada, that's for sure."

In the meantime, Ritz says Canada will support industry stakeholders in the United States and Mexico in a bid to obtain a court injunction preventing the U.S. government from implementing the bill.

The Canadian Cattlemen's Association, representing more than 68,000 beef farms and feed lots across the country, said it too would support the government taking the fight to the WTO.

"The (association) fully supports the government of Canada's efforts to pursue WTO approval to impose retaliatory tariffs," the organization said in a statement.

Country-of-origin labelling rules are blamed for complicating the import of meat and livestock into the U.S., driving up the cost of business, and causing an estimated $1 billion a year in losses.

The rules require segregation of beef, pork and chicken so it can be labelled with details about the origins of the meat before being sold in U.S. stores.

For beef producers, Ritz said the requirements add about $100 to the cost of each exported animal.

Some American companies have said they can't afford to sort, label and store meat from Canada differently than meat from domestic animals. In October, Tyson Foods Inc., one of the largest buyers of Canadian cattle in the U.S., said it would stop buying from feedlots north of the border because of the higher cost of complying with the regulations.

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